Korea-US FTA faces tough scrutiny, debate in US by industries, Congress
Yonhap News, Seoul
Korea-U.S. FTA faces tough scrutiny, debate in U.S. by industries, Congress
2 April 2007
WASHINGTON, April 2 (Yonhap) — New political and economic opportunities opened for South Korea and the United States with the free trade agreement (FTA) announced Monday, but the way ahead for the deal in Washington still has uncertainties, and even risks.
The deal, its first with an Asian country for the U.S. side, signifies a giant step into a region burgeoning with potential. It also compels other Asian nations, notably Japan and China, to seek competitive trade deals with the U.S.
The economic impact is expected to be greater for South Korea than for the U.S. Earlier studies by both the U.S. International Trade Commission and the non-partisan Institute for International Economics predicted more growth in U.S. exports to South Korea than vice versa. While they showed both sides would gain, the two reports envisioned new exports from the U.S. to its Asian partner would be twice as much as new South Korean imports.
The U.S. gains would be in some of the most sensitive areas, including agriculture and autos, that so far has been the target of American grievances.
But with the conclusion of the FTA negotiations comes the next grueling part of the process as American industry leaders and the Democrat-controlled Congress vow to put the deal under scrutiny.
Technical questions remain on if and how much the Congress can demand changes to the agreement. The trade promotion authority, which expires in July, dictated the deadline on the negotiations, but does not clearly say how specific an FTA needs to be when it is presented for Congressional review. Sources here so far say the U.S. Trade Representative (USTR) and the legislative body differ on the leeway for changes.
Industry leaders immediately vowed to closely review the proposed deal.
"We will look at the text and carefully examine it," Richard Holwill, vice president of public policy at Alticor, told Yonhap. He is also co-chairman of the U.S. Chamber of Commerce in charge of the Asia task force.
"The key to this negotiation is that we have to have a trade agreement that works for both countries. If it’s not a win-win situation, the agreement will not go forward," he said.
Bill Reinsch, head of the National Foreign Trade Council, said his organization will focus its review of the deal on automobiles, pharmaceuticals, investment, beef and rice, all of which were the sticking points throughout the 10-month negotiations.
"If these issues are not satisfactorily addressed, the chances of congressional approval are not good," he said.
The makeup of the Congress suggests difficulties ahead. Four senior Democrats last week had complained to the USTR late last week that the proposal they saw so far was "completely inadequate in the face of Korea’s longstanding iron curtain to American manufactured products."
"We simply cannot allow this one-way street with Korea to stand," the letter said.
As eye-catching as the content of the letter were the four names attached to it — House Speaker Nancy Pelosi, House Majority Leader Steny Hoyer, Chairman of the House committee on ways and means Charles Rangel, and chairman of the House subcommittee on trade Sander Levin.
"All four of these people are in the critical positions that sway the decision on the FTA with South Korea," said a congressional aide, speaking only on condition of anonymity.
"They can, and may, block this FTA," the aide said.
While strictly an economic agreement, the fallout from the 90-day review process in the U.S. would impact bilateral political relations as well. Both Seoul and Washington have said that a successful FTA would strengthen their alliance, but that a failure risks jeopardizing it.
The pressure is now on the USTR to convince the legislators that the FTA is in the best interests of the U.S.
